Roc Karnataka Penalises Public Limited Company For Agm Notice Violation

The Registrar of Companies (ROC), Karnataka, has imposed penalties totalling ₹40,000 on a public limited company and three of its directors. The penalty was levied for violating Section 101 of the Companies Act, 2013, which requires a company to issue a minimum of 21 clear days’ notice before convening a Annual general meeting. 

What Happened?

The statutory audit report for FY 2019–2020 was submitted by the company’s auditor on December 29, 2020.

• On the same day, the company convened and held its Annual General Meeting (AGM) to approve the financial statements.
• This simultaneous scheduling raised serious compliance concerns, as there was no evidence of the mandatory 21 clear days’ notice having been given to shareholders.
• The ROC initiated an inquiry under Section 206(4), read with Section 208 of the Companies Act, to examine the matter.
• Documents such as AGM notices, board minutes, and consents were called for and reviewed.

Also read about  MCA Penalises Company and Directors for Not Filing Financial Statements and Board’s Report

Legal Provisions Involved

The case centred around the following provisions of the Companies Act, 2013:

ROC Findings

After reviewing the company’s reply and conducting a physical hearing on March 6, 2025, the Adjudicating Officer noted:

• The company failed to issue a proper notice in compliance with Section 101.
• There was no documented shareholder consent for a shorter notice period.
• The company is a public limited company; hence, it does not qualify as a “small company” under Section 2(85).

Therefore, no relief under Section 446B (lesser penalties) was applicable.

Nature of Violation

The company held its AGM to approve the financial statements for FY 2019–20 on the same day the statutory audit report was submitted — December 29, 2020. This indicated that:

• No clear 21-day notice was issued for the meeting
• No record of obtaining 95% shareholder consent for shorter notice
• The entire meeting process violated Section 101(1) of the Companies Act, 2013

The ROC’s inquiry under Sections 206(4) and 208 confirmed these facts upon reviewing:

• Copies of notices sent to shareholders, auditors, and directors
• Board resolutions related to the AGM
• The company’s written submissions during the inquiry

Penalty Details

As per the adjudication order, the following penalties were imposed under Section 450:

The company and its officers-in-default are required to:

• Pay the penalty within 90 days of receiving the order.
• File Form INC-28 as proof of compliance with the ROC.

Failure to comply may attract further penalties under Section 454(8), including daily fines or prosecution. 

Timeline of Events:

Next Steps for the Company and Directors:

The company and officers-in-default must pay the penalty within 90 days of the adjudication order

Payment must be reported through Form INC-28 to the Registrar of Companies

Failure to comply may lead to further penal action under Section 454(8), which includes:

• Additional daily penalties
• Prosecution under the Companies Act

Key Takeaways for Companies and Directors

Below are the main lessons and compliance reminders emerging from the ROC’s order:

Strict Adherence to Notice Periods

All companies, especially public limited ones, must strictly follow the 21 clear days’ notice requirement for general meetings. The "clear days" exclude both the day the notice is sent and the day of the meeting.

Proper Documentation is Critical

Maintain records of:

• AGM/EGM notices sent to shareholders and auditors
• Board resolutions authorising meetings
• Shareholder consents (if short notice is used)

Shorter Notice?

Obtain 95% Consent in Writing. Shorter notice is legally permitted only if 95% of the shareholders entitled to vote provide their consent in writing or electronically.

Directors Are Personally Liable

Each director named as an “officer-in-default” may be held liable and penalised individually for procedural non-compliance.

Public Companies Are Excluded from Section 446BOnly small companies and start-ups are eligible for reduced penalties under Section 446B. Public companies must comply fully.

For Your Compliance Calendar

AGM for FY 2024–25 must be held by September 30, 2025 (for most companies unless extension is granted):

•  Start planning at least 60 days in advance
•  Issue 21 clear day's notice
•  File MGT-7 (Annual Return) and AOC-4 (Financial Statements) on time

Need Help Staying Compliant?

At IndiaFilings, we help companies avoid costly compliance mistakes like this one. Whether it's planning your AGM, issuing proper notices, or ensuring timely filings like MGT-7, AOC-4, or INC-28, our experts can guide you every step of the way.

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Frequently Asked Questions (FAQs)

1. What was the key violation committed by a Public Limited Company?

 The company held its Annual General Meeting (AGM) on the same day the statutory audit report was submitted (December 29, 2020), without giving 21 clear days’ notice as required under Section 101 of the Companies Act, 2013.

2. What does "21 clear days’ notice" mean?

It means the notice period must exclude both the day the notice is sent and the day of the meeting. Effectively, the notice must be sent at least 23 days in advance.

3. Is it permissible to hold a general meeting with less than 21 days’ notice?

Yes, but only if 95% of shareholders entitled to vote consent to holding the meeting at shorter notice, either in writing or electronically.

4. What penalty was imposed in this case?

A total penalty of ₹40,000 was imposed — ₹10,000 each on the company and its three directors — under Section 450 of the Companies Act, 2013.

5. Why wasn’t a lesser penalty granted under Section 446B?

Because a Public Limited Company is a public limited company, Section 446B’s relief is available only to small companies and start-ups.

6. What triggered the ROC’s inquiry into this violation?

An inquiry was initiated under Sections 206(4) and 208 after it was found that the AGM and audit report occurred on the same day, suggesting procedural non-compliance.

7. What documents did the ROC review during the inquiry?

The ROC examined the AGM notices sent to shareholders, board resolutions, auditor correspondence, and the company’s written submissions.

8. What are the consequences of not paying the penalty?

If the company or directors fail to pay the penalty and file Form INC-28 within 90 days, further action may be taken under Section 454(8), including daily fines or prosecution.

9. Can directors be penalised individually for such compliance failures?

Yes. Directors classified as “officers-in-default” under the Act can be held personally liable for procedural lapses and penalised accordingly.

10. How can companies avoid similar penalties in the future? By ensuring:

• Timely audit finalisation and board approval of accounts
• Issuance of clear 21-day AGM notices
• Proper recordkeeping of meeting notices and consents
• Early planning for compliance filings with help from professionals like IndiaFilings